Yahoo sell-off rumours mount as it scraps $32bn Alibaba spin-off

Yahoo has scrapped its plan to spin off its stake in Chinese e-commerce firm Alibaba and will instead create a new company that contains everything but its Alibaba shares.

The company described the move as a "reverse spin off" that would see the Alibaba shares, worth around $32bn, transferred to a newly formed company.

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The stock from this company would be distributed amongst Yahoo shareholders and result in the creation of two separate publicly traded companies, Yahoo said.

The reshuffle could take up to a year and will add further to speculation that Yahoo plans to sell off its core web business. "A separation from our Alibaba stake, via the reverse spin, will provide more transparency into the value of Yahoo’s business," Yahoo CEO Marissa Mayer said in a statement.

Yahoo's decision to abandon its plan to spin off its shares in Alibaba was based on "the market's perception of tax risk", according to Maynard Webb, chair of Yahoo's board of directors. This risk would have "impaired" the value of the Alibaba stock, he added.

Earlier this week Fran Shamo, Verizon's chief financial officer, said the company would consider buying Yahoo if the sums added up. "If we see there is a strategic fit and it makes sense for our shareholders and we can return value, I mean we’ll look at it," he told Bloomberg, adding that it was still "too premature" to talk about any potential deal.